The plainer way of life was not just a patriotic morale-builder. It was a necessity. The natural trade routes between the Chesapeake and Britain were closed and the tobacco trade was ruined. To finance the war the assembly taxed nearly everything which could be taxed. Many taxes were those which the Virginians had rejected when imposed by parliament, including legal papers and glass windows. The difference was the necessity or war and the source of the tax laws--the people's own elected representatives.
Taxes, alone, however have never financed a major war. As in the French and Indian War, Virginia issued paper money and floated state loans. Between 1776-1780 the state debt reached £26,000,000 and in the following two years nearly doubled. By 1779 loans and taxes were not enough and the assembly levied taxes on commodities as well as currency. Taxpayers had to make payments in grain, hemp, or tobacco rather than inflated paper money alone. Inflation set in. By 1780 coffee, when you could get it, sold for $20 per pound, shoes were $60 per pair, and better grades of cloth were bringing $200 a yard. The exchange rate of Virginia money to hard coins (specie) was 10-1 in 1778, 60-1 in early 1780, and then spiraled upwards to 150-1 in April 1780, 350-1 in July, and was going out of sight as Cornwallis' army ravaged the state. It never reached the ratio of 1,000-1 as did the Continental Congress currency, but the phrase "not worth a Continental" might equally have applied to Virginia money. Few of those who served Virginia and the new nation, whether as officers, footsoldiers, governors, judges, or clerks, did so without suffering substantial financial losses. In many cases they were never reimbursed even for actual expenses.[40] Unfortunately there were many who reaped profits by exploiting the situation.
[40] For a good description of the economic impact of the war on one dedicated Virginian, read Emory Evans' Thomas Nelson of Yorktown: Virginia Revolutionary (University Press, Charlottesville, 1975), 65-123.
There also were thousands who moved across the mountains to new lands in the Valley, southwestern Virginia, and Kentucky. In fact, Virginia had to head off an attempt by North Carolinians, headed by Richard Henderson, to detach Kentucky from Virginia. The state had to watch attempts by other states to claim Virginia lands in the Ohio country. To forestall these attempts Virginia took two steps. In 1776 the Assembly divided Fincastle County into three counties--Kentucky, Montgomery, and Washington and established local governments there; and she agreed to ratify the new Articles of Confederation only upon the condition that all other states agree to give up their claims to the Ohio country and that all new states created from those territories have the same rights and privileges as the original states. In so doing, Virginians, under the leadership of Jefferson, formulated a colonial policy for the western lands which assured equality for the new states, a most important guarantee that there would be no superior and inferior states in the new United States. All states would be equal.